Microsoft and Nokia have announced that the world’s biggest software company will be acquiring the Finnish company’s Device and Services division, which includes its phones the Lumia and Asha brands as well as licensing agreements with other companies, a 10-year license to Nokia’s patents, and a 4-year license to HERE Maps as well as other perks.
The Nokia brand will not be going away – in future it’ll focus on furthering efforts for NSN, a leader in network infrastructure and services; HERE, a leader in mapping and location services; and Advanced Technologies, a leader in technology development and licensing, but majority of the company’s employees will be transferring to Microsoft.
“Following this transaction, Nokia’s financial situation is expected to be significantly stronger and its earnings profile significantly improved,” said Nokia CFO and interim President Timo Ihamuotila.
“We will have three well-positioned businesses, each a leader in its market. Overall, we will continue to focus on managing and maximizing the assets of Nokia Group prudently and pragmatically to create value for Nokia shareholders.”
Along with the acquisition of Nokia’s money maker, the company saw changes in leadership and its Board of Directors. To avoid conflicts in the future, Stephen Elop has stepped down from his position as President, CEO and resigned from the company’s Board of Directors. Elop will now serve as Executive Vice President, of Nokia’s Devices & Services division.
Elop is replaced by Risto Siilasmaa, current Chairman of the Nokia Board of Directors. Siilasmaa will be directly overseeing the progress and reports of Michael Halbherr, Executive Vice President, HERE; Elop; Timo Ihamuotila, Nokia CFO and interim President; and Jesper Ovesen, Executive Chairman of the NSN Board of Directors.
With Elop stepping down as Nokia’s CEO and taking on a more low-key role, is this Microsoft’s way of rolling out the red carpet to usher him in as its new CEO?
Steve Ballmer recently announced that he will be resigning from his position in the next 12 months, or whenever the company has found his replacement. When that was announced, Elop was one of the first names put forward by the media for the position and with the Nokia deal, he’s now moved into pole position to finally land the top job.
Elop previously served as Microsoft’s head of Business Division, which is responsible for the Microsoft Office and Microsoft Dynamics line of products, from 2008 to 2010. In September 2010, Elop became Nokia’s CEO. The move was immediately perceived as a Microsoft takeover with Elop acting as a mole for the company. These rumors were intensified when the two companies entered into a strategic partnership in 2011 when Nokia agreed to use Windows Phone in some of its products and eventually went on to dedicate its leading products to using the Windows Phone platform. Elop joined Nokia at a time when Apple and Google’s Android were already leading the mobile race. He wasn’t able to completely salvage the company, but he did at least keep it comfortably afloat. With Elop’s history in Microsoft and his experience serving as Nokia’s leader, he knows how to make the cash flow and keep the company ticking over.
“Given his resume, familiarity with Microsoft and roll as CEO of a leading smartphone manufacturer, Elop would seem to be the perfect person to run that new Microsoft. Given its conservative nature and addiction to its Windows and Office profits, an Elop appointment would likely be approved by Microsoft’s board,” Dan Rowinski of ReadWrite noted.
In the acquisition announcement, Microsoft made it clear that it is focusing on becoming a devices and services company – something that’s only been possible because of Nokia. Before the release of its Surface tablets, Microsoft relied almost exclusively on the licenses paid by OEMs using its platforms. With Nokia’s Device’s division, Microsoft will now have full control of how each Windows Phone device looks and feels, and will no longer need to rely on others to build a device for its mobile platform.